An Item for the Holiday Wish Lists: Property

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The New York Sun

It is time to send a letter to the North Pole asking Mr. Claus to help you locate a commercial real estate site that is for sale in the city. Mr. Claus is likely to have some difficulty this year locating any sites, though, due to the volume of this year’s sales. Many signs point to 2005 as the year with the highest-recorded sales volume in history. Sales are expected to exceed a total of $23 billion.


The executive managing director and head of the Studley Capital Transactions Group, Woody Heller, said, “If you are asking Santa for an office building, it will be more difficult to fill your stocking because the market has changed most of its focus from office to residential properties and, further, many of the office properties which have traded have been purchased with the intent of conversion to residential condominiums.”


Investors from around the world are interested in owning a building on the famed Fifth Avenue. Before the end of the year, a number of small buildings may be sold to the highest bidder. In February 1996, a partnership of Emmes Realty Services and Apollo Real Estate Advisors purchased four buildings from Fuji Bank.Emmes, through Cushman & Wakefield, is marketing for sale properties at 535 and 545 Fifth Ave. and at 509 Fifth Ave. These buildings collectively contain about 500,000 square feet of space. Industry leaders expect these properties to sell for about $250 million, or $500 a square foot.


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A few years ago, RFR Realty purchased the 40-story, 371,000-squarefoot building at 521 Fifth Ave. from a partnership of Silverstein Properties and Loeb Partners Realty. The building may now fetch close to $185 million. Mr. Heller is marketing the land under the building at 600 Fifth Ave. The seller is a nonprofit, which has owned the land for 148 years. The new purchaser is buying a 79-year land lease. According to industry sources, the land may fetch $185 million.


Last November, the principal shareholders of Fortunoff sold 75% of the company to two private equity firms, Trimaran Capital Partners and Kier Group Holdings. In September, a partnership of R Squared, the Fortunoff family, and Edge Partners sold the Source at White Plains, a 260,000-square-foot shopping center, for $153 million. Last month, Fortunoff agreed to sell its 12-story, 64,000-square-foot flagship store at 681 Fifth Ave.They will be getting about $90 million, or $1,406 a square foot, from Metropole Realty Advisors. According to industry sources, before the end of the year, Fortunoff plans to enter into a long-term lease for 17,000 square feet on the first three floors of the building.


Demand for Fifth Avenue properties is echoed on 57th Street. Later this month, the 16-story, 72,200-square-foot building at 50 W. 57th St., owned by Macklowe Properties, is expected to be sold to a real estate investment trust for about $50 million, or $700 a square foot. Cushman & Wakefield is marketing two properties on 57th Street.These properties include a 15-story, 60,000-squarefoot office building at 29 W. 57th St. and the retail and office condo component of a building at 49 W. 57th St. Trade sources expect the properties to fetch close to $525 a square foot.


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Last month, Andrew Farkas of Island Capital Group and an investor from Dubai entered a contract to purchase the former Helmsley Building at 230 Park Ave.They agreed to pay more than $700 million for the 34-story,1.2 millionsquare-foot tower, which was built in 1929. The seller is an investment group headed by Robert Bass, who acquired the property from the estate of Harry Helmsley in 1998 for $250 million.


C&K Properties has been an active buyer and seller this year. In September, C&K and its partners – including Joseph Moinian and David Werner – sold the 1.1 million-square-foot EAB Plaza in Uniondale, Long Island, to the NYSE-traded real estate investment trust Reckson Associates Realty. Two weeks ago, C&K Properties, David Werner, and a group of investors purchased the 41-story, 409-unit residential rental tower River Terrace at 515 E. 72nd St. from the Macklowe Organization for $363 million. Last week, C &K entered a contract to purchase the 32-year-old, 18-story, 779,000-square-foot Two Gateway Center in Newark, N.J. The buyers agreed to pay $165 million, or $212 a square foot, to American Landmark Properties. The building is part of the four-building complex adjacent to the Penn Station rail terminal. American Landmark purchased these properties in 2001 from Steve Witkoff and Joe Friedland for about $105 million.


Pitcairn Properties and partners are the owners of the Magellan, a 35-story, 168-unit residential rental tower completed in 2003 at 35 W. 33rd St., adjacent to the Empire State Building. Twenty percent of the units are reserved for moderate-income residents. The property is being marketed for sale and will probably remain as a rental building. Pitcairn and its partners, GMAC Commercial Equity Investments and the Parr Organization, are marketing for sale the 217,000-squarefoot, three-story office building at 201 Old Country Road in Melville, Long Island. The joint venture acquired the building in 2000 from Astoria Federal Savings for about $32 million. According to industry sources, the building may trade for $50 million.


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Before the end of the year, a number of residential rental apartment buildings are expected to be in contract for sale. Most of the prospective purchasers will probably convert the properties into condominiums. On the Upper East Side there is the 32-story, 261-unit building called the Camargue at 303 E. 83rd St., at the northeast corner of Second Avenue. Trade sources indicate the owner, Lloyd Goldman, might fetch close to $775,000 a unit, or $202 million in all. The Langham at 135 Central Park West and West 73rd Street, a 13-story building with 58 units, is expected to sell at one of the highest prices in history. According to the trade, the Manocherian family may be able to sell the property for $575 million, or close to $10 million an apartment.


Glenwood Management is expected to fetch close to $200 million, or $734,500 a unit, for the 30-year-old, 35-story Marlborough House at 235 E. 40th St. Two blocks away is the Montrose, a 97-unit residential rental tower built in 2001 at 308 E. 38th St. This property may fetch close to $350 million. A six-story rental building with 40 apartments and two stores at 40 East End Ave. is on the market. The sellers have listed the property for $25 million. Before the end of the year, a property at a residential rental building at 220 E. 63rd St. is expected to sell for about $100 million to a prominent real estate fund. Early next year, a pre-war rental building at 530 Park Ave. is expected to be marketed for sale. According to industry insiders, the property will fetch more than $100 million. A residential rental building at 600 Washington St. may be sold before the end of the year. Trade sources believe a residential apartment REIT will be the purchaser.


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In downtown Brooklyn, at 180 Montague St., the owners of the 33-story, 192-unit rental building have listed the property for sale. The property is expected to fetch close to $100 million. Last month, Massey Knakal Realty Services sold a development site in the Boerum Hill section of Brooklyn for $25 million, or $106 a square foot. The site is at 230 Livingston St. and 225 Schermerhorn St., between Hoyt and Bond streets. The proposed development contains about 235,000 square feet, including 226 rental apartments and about 18,000 square feet of groundfloor retail space.


Before the end of the year, Rockrose Development, the owner of the 25-story, 374,000-square-foot office building at 90 Broad St., is expected to sell it.Industry sources expect the property to fetch about $95 million.The new owners may convert the property into residential condominiums. Last month, the Reckson Associates REIT entered a contract to sell the 29-story, 466,000-square-foot office building at 100 Wall St. to Bostonbased Beacon Partners. Beacon paid $134 million or $290 a square foot.


Even though interest rates have risen and the 10-year Treasury note yield is at 4.6%, real estate purchases are unabated. Lenders continue to be bullish on real estate and are willing to provide up to 97% financing. One real estate investment banker said, “There is so much money available, you can finance any deal at any level of risk.”



Mr.Stoler is a television broadcaster and senior vice president at First American Title Insurance Company of New York. He can be reached at mstoler@firstam.com.


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